Managerial acct exam 3 Flashcards

(43 cards)

1
Q

is the process of planning future business actions and expressing them as formal plans.

A

Budgeting

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2
Q

What is an example of a benefit of budgeting

A
  1. Focuses on future opportunities and threats to the organization. Makes management devote time to plan for the future.
  2. Control function requires management to evaluate (benchmark) business operations against some norm.
  3. Helps coordinate activities so all employees and departments understand and work towards company’s overall goals.
  4. Written budget effectively communicate management’s specific action plans to all employees. Informal communication of business plans can create uncertainty and confusion.
  5. Budgets can be used to motivate employees. Provide goals to attain or exceed.
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3
Q

Which of the following are necessary components of the master budget:

  • operating budgets
  • historical income statement
  • budgeted balance sheet
  • prior sales reports
  • capital expenditures budget
  • financial budget
  • sales budget
  • operating budget
  • historical financial budget
A

everything besides:
prior
hist

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4
Q

We use what to schedule cash payments

A

direct materials budget and beg bal sheet

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5
Q

What is the usual starting point for preparing a master budget

A

forecasting sales

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6
Q

A plan that lists dollar amounts to be recieved from disposin of plant assets and dollar amounts to be spent on purchasing additional plant assets

A

capital expenditure budget

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7
Q

Preset costs for delivering a product or service under normal conditions

A

standard costs

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8
Q

the difference between actual price per unit of iput and standard price per unit of input results in

A

price variance

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9
Q

an analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonable close to standard is

A

management by exception

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10
Q

Static budget is another name for

A

master budget

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11
Q

Actual sales< Budgeted sales

A

unfavorable vairance

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12
Q

Actual sales> budgeted sales

A

favorable

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13
Q

an expense that is readily traced to a department bc it is incurred for that dept sole benefit

A

direct expense

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14
Q

Costs that the manager has the power to determine of affect

A

controllable costs

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15
Q

When preparing a departmental income statement, what steps should we take?

A
  1. identify direct expenses
  2. Allocate indirect expenses
  3. Allocate service department expenses
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16
Q

What is least likely to be considered in preparing a sales budget

A

capital expenditures budget

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17
Q

Incurs costs without directly generating revenues

A

cost center

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18
Q

generates revenues and incurs costs

A

profit center

19
Q

generates revenues and incurs costs, and its manager is also responsible for the investments made in its operating assets

A

investment center

20
Q

What does a responsibility performance report list?

A

actual expenses that a manger is responsible for and their budgeted amounts

21
Q

What type of budgeting does responsibility acct use?

A

flexible budgeting

22
Q
Which isn't an ex of a cost center?
research dept at microsoft
juice division at coca cola
accounting dept at Warner
advertising dept at Hertz
purchasing dept at best buy
23
Q

regardless of the system in departmental cost analysis

A

indirect costs are allocated, direct costs are not

24
Q

A challenge in calculating the total costs and expenses of a dept is

A

allocating indirect expenses to the dept

25
The most useful data for evaluation of a managers cost performance is based on
controllable costs
26
As volume increases, ____ stays the same
fixed overhead
27
When there is a favorable variance what does the journal entry look like?
credit to COGS
28
When there is a unfavorable variance what does the journal entry look like?
debit COGS
29
if there's a variance in direct materials who should we go to?
purchasing manager
30
if theres a labor variance who should we go to?
production supervisor
31
how do we close factory overhead?
in COGS
32
two parts of fixed overhead
spending variance and volume variance
33
2 parts of variable overhead
spending variance and efficiency variance
34
Rent and utilities are ex of what?
unavoidable costs
35
direct expenses are traced directly to
a department and incurred for their benefit
36
indirect expenses are the costs incurred for
the join benefit; not traced to only 1 dept
37
If contribution margin exceeds avoidable costs it causes income to
decrease
38
Budget that a company continually revises as time passes; revise the old budget by adding a new quarterly budget to place the quarter that just elapsed
rolling budget
39
Operating budget is made up of
sales budget, production budgets, and general admin budget
40
What budget shows number of units to be produced in a period. Is based on the budgeted unit sales in the sales budget and inventory considerations.
production budget
41
Which of the following is not a step in creating operating departmental income statements ``` prepare the depart income statement eliminate the uncontrollable costs allocate service depart expenses accumulate rev and direct expenses by dept allocate indirect expenses ```
eliminate uncontrollable costs
42
actual expenses>budgeted expenses
unfavorable
43
actual expenses
favorable